Can this batch be saved?? Is there anything I can add to it to make it more stretchy? I've tried added water, but even the littlest bit makes it way too sticky. So then I had to add more PS. It's like an endless cycle. Does it need more marshmellow? Can that be added after the fact?

Yes, too much powdered sugar will make it stiff. I never use the whole two pounds. Add some marshmallow. You'll get it, after awhile you won't even measure And if you don't add enough sugar you'll notice sagging when it's on the cake. I started to have that happen. I was adding less sugar, so it was softer and easier to work with and roll out, but then I started to notice sagging on my cakes.

Make sure it's not just sticking to your hands. add just a touch of crisco to your hands and see if that does it. if not, add a touch of powdered sugar. it also may not hurt to wrap up what you have and let it sit overnight. the way it handles right now and the way it will handle tomorrow will be different. (that's assuming you don't need it for today!)